I Love My New Couch.....and Capitalism
When Jackie and I moved to New York in September, we left our sofa behind in Charlottesville, as our yellow lab, Winston, had treated it as a bed and as a chew toy. Needing a new couch, we ordered one from Bloomingdale’s. We were stoked about the beautiful sky blue fabric and the pullout foam mattress, but it took three months before we got a delivery date. When it was scheduled to arrive, I took the day off and waited with Winston. Around noon, the delivery truck arrived but, twenty minutes later, still no hint of a couch. When the knocking sound on the door finally aroused Winston’s bark, I met, much to my dismay, a man in a blue shirt holding a measuring tape.
The movers were unable to fit the sofa into the elevator. I was devastated. Jackie and I had waited for three months! Plus, we had scheduled a Hanukkah party with the expectation that we would finally have a proper seating area for our guests.
Thankfully, capitalism solved my couch problem. I called Bloomingdale’s, and the salesman told me to contact Garry Furniture Service, which offered to take apart the sofa, move it into our apartment, and put it back together all for a cost of $400.
The beauty of the capitalist system is that it encourages entrepreneurs to see a market need and devise services and products to fill that need. As Jeffrey Tucker writes, “Free market capitalism is what you get when people act on their own, entirely without central direction, and with their own property, and within human associations of their own creation and in their own interest. It is the beauty that emerges in absence of control.” In the capitalist system, if you have a new idea, you can try something. If it works, you get to keep the upside of your labor. I’m glad Garry came up with the idea for the furniture company, and I’m grateful there were no regulations preventing me from creating a contract with Garry Furniture Service LLC. In short, this business wasn’t exploiting me or price-gouging me. It was helping me.
So the couch was an amazing purchase. Jackie and I sit on it every night to wind down in front of the television. In particular, we enjoyed watching Superstore, a comedy about an imaginary big box retail store. But I was struck by an episode in which an angry customer yells about how the store, Cloud 9, “sells everything for more than it costs to make and then keeps the profits.” Another character in the episode also mocked the idea of Cloud 9 wanting to make a profit. The writers of Superstore created great jokes, but they fell flat with trying to make fun of the profit motive.
When I think of the positive power of profit, I think of my work at Trader Joe’s. For instance, consider our pricing of ketchup at $2.29. Let’s assume, for purposes of this discussion, that it only costs $1.00 to make the ketchup and that we wanted to price-gouge on ketchup by selling it for $10. If we tried this, another grocery store would swoop in, price ketchup much lower, and Trader Joe’s would lose business. In other words, in a world of capitalism and competition, we make more profit by selling something at a lower cost than other grocery stores.
Profits don’t just push us to offer great products at great prices. They drive us to innovate, increase productivity, and become more efficient. Consider the “check-in” process at Trader Joe’s. Like all companies, we need to properly manage our inventory. When I started ten years ago, it took three to four people to break down each pallet off the truck. A few of us would call out the product numbers while one crew member would use a marker or pen to check off what we received. But the profit motive led us to partner with an innovative company led by an innovative entrepreneur. This company created a scanning device that relies on magnets. Whereas before it took a team and a few hours to check in the entire truck, now it takes one person and a few seconds. Or consider our approach to paper bags. For years, we handed out paper bags with weak handles that would often break, requiring us to double bag most of the time. But a year ago we started using stronger bags. This doesn’t just save money on bags. It also makes it quicker to bag, which gets customers out the door faster. The drive to make profits doesn’t just keep prices low and improves the experience for those shopping at Trader Joe’s. The profit motive pushes us to open more stores. More stores mean more jobs, more ways for a crew member to become a mate, and more ways for a mate to become a captain.
The pursuit of profits doesn’t just lead to better products at lower prices, better customer service, and more jobs. The pursuit of profits results in new products that we don’t even know we need. I think of a commercial that Jackie and I watched while sitting on our new sofa. The ad was for Dawn Platinum Plus Powerwash dish spray. Here is an item about which Jackie and I hadn’t heard. Since we’ve discovered it, it’s improved our ability to have clean dishes more quickly.
Capitalism is when a team at Procter & Gamble develops a new soap formula and reaps the economic benefit. Capitalism is when Garry starts a company to cut up furniture and piece it back together and reaps the economic benefit. Capitalism is what leads to Sublime Ice Cream Sandwiches, Everything but the Bagel seasoning, Soy Chorizo, Cookie Butter and thousands of great, innovative products by a company that is on the prowl for more profit.
My love affair with free markets began in high school, when I read Milton Friedman’s Capitalism and Freedom. In this short book, Friedman makes the case that it is impossible to have political freedom without economic freedom.
Friedman argues that economic systems which concentrate power in the hands of the state inevitably give the government greater control over how individual citizens live. The more the government controls economic production, the more leverage it has to suppress dissent. If the state controls employment, it can punish political opponents by denying them jobs. If it controls media and business funding, it can use economic pressure to silence criticism. By contrast, when people have the ability to make their own economic choices—where to work, what to buy, how to invest—they gain a degree of independence from government authority. In societies with private enterprise, individuals and organizations can resist political pressures more effectively because they are not wholly dependent on the state for their livelihoods.
In short, economic freedom doesn’t just make my life more convenient. It empowers individuals, fosters innovation, and safeguards political liberty. When individuals are free to create, trade, and compete, society as a whole prospers.
Of course, free market capitalism isn’t a guarantor of political freedom. We need the rule of law, a free and independent press, free and fair elections, and an independent judiciary. None of these are natural to human nature. Indeed, the most common form of government in the history of human affairs is of “strongman rule” by a powerful personality. The natural state is of rule by the sword, not rule by written law. As Ronald Reagan said, “Freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them.”
In the end, free markets don’t just deliver sofas—they deliver solutions, opportunities, economic growth, inventions, and, most importantly, freedom itself.